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Panasonic and Tesla are teaming to create a Giga Factory that will create Lithium Ion batteries for the Model 3 and beyond.

The plant will be based in The U.S. and managed by Tesla.

Panasonic will manufacture and supply cylindrical lithium-ion cells and invest in the associated equipment, machinery, and other manufacturing tools based on their mutual approval.

The plan is to continue to reduce the cost of Lithium Ion technology by mass producing the batteries.

They hope to 1) Dominate the electric vehicle market and 2) Push the envelope on electric technology.

JB Straubel, Chief Technical Officer and Co-founder of Tesla Motors said: “the Gigafactory represents a fundamental change in the way large scale battery production can be realized. Not only does the Gigafactory enable capacity needed for the Model 3 but it sets the path for a dramatic reduction in the cost of energy storage across a broad range of applications.”

Yoshihiko Yamada, Executive Vice President of Panasonic, added, “We have already engaged in various collaborative projects with Tesla toward the popularization of electric vehicles. Panasonic’s lithium-ion battery cells combine the required features for electric vehicles such as high capacity, durability and cost performance. And I believe that once we are able to manufacture lithium-ion battery cells at the Gigafactory, we will be able to accelerate the expansion of the electric vehicle market.”

The Gigafactory will produce cells, modules and packs for Tesla’s electric vehicles and for the stationary storage market. The Gigafactory is planned to produce 35GWh of cells and 50GWh of packs per year by 2020. Tesla projects that the Gigafactory will employ about 6,500 people by 2020.